The funds thus raised are expected to be upstreamed to the group’s London-based holding company Vedanta Resources Ltd (VRL) through dividend payouts, the people said, asking not to be named as the discussions are private.
The loan is being raised through THL Zinc Ventures, a Mauritius-based wholly owned subsidiary of VDL. Vedanta Group is in talks with JP Morgan, Barclays, Standard Chartered and Deutsche Bank for the $1 billion loan.
The global banks are seeking 800 basis points over secured overnight financing rate (SOFR), while the mining to metals giant is negotiating for a lower rate, as ET reported last week. SOFR is currently at 4.55%.
VDL guarantees will help the group lower the asking rate on the loan, which is around 300 basis points more than what it anticipated, said the people cited above.
Dividend Route
Vedanta and RBI did not respond to ET’s queries.VRL is seeking funds to meet its upcoming debt obligations and has been engaged in talks with banks as well as private funds.
VRL has $400 million of dollar bonds due in April and $500 million dollar bonds in May. It has another $1 billion bond maturing in January 2024. Apart from this, the holding company has $1.1 billion term debt and $600 million in interest payments coming up besides $450 million of inter-company loans.
It is unclear which financial route will be used by VDL to upstream the loan taken on the books of THL Zinc Ventures to VRL.
The group has predominantly been servicing debt through loans and dividends from operating companies such as VDL and Hindustan Zinc Ltd (HZL). So far VDL and HZL have announced a record four dividends this financial year. HZL, which is a subsidiary of VDL, declared its fourth dividend for FY23 on March 21, amounting to a payout of ₹10,983 crore